U.S. Senate Votes in Support of 'Internet Sales Tax' Bill, 75-24

WASHINGTON, D.C.—The Senate this afternoon voted in support of the Marketplace Fairness Act following an impassioned debate during which senators from each party expressed both support and opposition for the bill. If it becomes law, the Act will grant states the right to compel online retailers, no matter where they are located, to collect sales tax from customers at the time of the transaction. A voluntary scheme, the bill contains some conditions requiring participating states to implement simplified sales tax laws, but the upside would presumably come in the form of significant and much-needed revenue.

One indication of the ideological confusion surrounding the so-called “internet tax bill” can be found in the fact that the ultra-conservative Redstate.com thought the bill is more unfair than the status quo, while the Daily Caller yesterday argued that conservatives should support the bill.

A similar bipartisan reaction was in play on the senate floor in the minutes leading up to the 7pm EST vote. Both Democratic Senator Ron Wyden (D-OR) and Republican Senator Kellie Ayotte (R-NH) expended unusual energy in impassioned debate against the bill, with Wyden arguing that it ignores the fact that the online marketplace is now global, and it will advantage foreign online retailers to the detriment of domestic online retailers, and Ayotte asserting that it forces a sales tax on states, like New Hampshire, that have no sales tax.

Senator Dick Durbin (D-Ill), an author of the bill, countered forcefully that the bill was basically about the right of states to enforce their tax laws for all people who choose to do business (i.e. sell goods and services) in their state, and that it finally levels the playing field for all retailers.

Wyden countered several times, ultimately to no avail, that the bill not only advantages foreign retailers, but is unenforceable globally, a claim that Durbin soundly rejected.

Senator Max Baucus (R-MT) also tried to push back against Durbin, arguing that foreign tax collection is either enforceable or not, and no language in any bill makes it so without a treaty in place to enforce it. He strongly urged a no vote.

Senator Marco Rubio (R-FL) also spoke in opposition to the bill, supporting an Ayotte claim that the bill will also create an undue burden for small online retailers who will now have to endure potential end-of-the-year audits for 50 other state, and that it is fundamentally unfair to requires small businesses to collect taxes for other states.  

This amendment instigated one of the more prolonged and passionate debates of a full day of senate voting on numerous amendments to the chamber’s budget, to be sure, but in the end supporters of the bill won the day on a vote of 75-24 in favor, all but ensuring that the final budget resolution that will be voted on by the Senate before it leaves for its two week Spring break will contain the "internet sales tax" provision in its current form.

Not surprisingly, businesses are already lining up, "ready to help retailers respond to the requirements of the Marketplace Fairness Act."

The complete text of the bill can be read here.